Align to pay Ormco $13 million in settlement

Aug 16, 2009

Align Technology will pay Ormco, a subsidiary of Danaher, $13 million in cash and 7.6 million shares as part of a settlement agreement related to ongoing patent litigation between the two companies.

The deal gives Danaher a 10% ownership stake in Align. In addition, the companies have agreed to collaborate over the next seven years to develop and market an orthodontic product that combines Align Technology's Invisalign system and Ormco's Insignia orthodontic brackets and arch wires system.

The companies will retain ownership of their pre-existing intellectual property and will grant each other intellectual property licenses in their respective field for jointly developed combination products, they announced.

Align has had ongoing patent litigation with Ormco since 2003 when Ormco sued Align for patent infringement and Align won. Ormco appealed that decision, and in August 2007 the Federal Circuit Court of Appeals ruled that 86 of Ormco's 92 claims (related to U.S. Patents Nos. 6,616,432, '243, '861, and '444) were invalid and not infringed by Align. Ormco pursued the six remaining claims, which relate generally to a process of gathering and organizing tooth data, in the current lawsuit against Align.

In June, a jury found in favor of Ormco's patent infringement charges against Align.

As part of the current settlement agreement, Ormco has agreed to release all past claims it asserted against Align based upon the '444 patent and has agreed not to sue Align for any claim of infringement based upon the patent as a result of Align's relating to removable aligners.

"We are pleased to resolve this ongoing litigation with Ormco and to begin a new relationship that meets our shared goals of providing innovative products and excellent service to our orthodontic customers," said Thomas Prescott, Align Technology president and CEO, in a press release. "This collaboration with Ormco gives us the ability to compete for a segment of the market that is difficult to treat with Invisalign alone, and accelerates our long-term plan for a combination product."